Crypto Markets Brace for White House Showdown as CLARITY Act Faces March 1 Deadline

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Crypto markets are entering a critical policy week with a mix of optimism and uncertainty. Investors are closely watching Washington as Congress prepares to revisit the long-debated crypto market structure bill in a key White House meeting tomorrow. Sentiment remains cautious, as regulatory clarity could either unlock fresh institutional participation or introduce tighter restrictions that weigh on parts of the industry, particularly stablecoins.

The discussion centers on the proposed CLARITY Act, legislation designed to define regulatory oversight and establish clearer rules for digital assets in the United States.

What’s Happening in Washington

In an X post, Eleanor Terrett revealed Congress’s third major meeting on the market structure bill. The focus this time is squarely on stablecoin yield, whether issuers should be allowed to offer rewards or interest-like incentives to holders.

The U.S. House previously passed a version of the crypto bill in July 2025, but final approval has stalled due to disagreements over these yield provisions. While broader elements of the bill aim to clarify jurisdiction between regulators and create a predictable framework for crypto firms, stablecoins have become the main sticking point.

Banks argue that allowing stablecoin rewards could pull deposits away from traditional institutions, weakening lending capacity and potentially disrupting financial stability. Crypto firms counter that stablecoins are not bank deposits and should not be treated as savings accounts. They warn that banning yield would stifle innovation and reduce consumer choice.

March 1 Deadline Adds Pressure

The White House Crypto Council recently held its second negotiation session, describing talks as “productive” but inconclusive. Banking representatives proposed a strict ban on any financial or non-financial incentives tied to stablecoin ownership, a move strongly opposed by crypto leaders.

The White House has now set a March 1 deadline for both sides to reach a compromise. The outcome could determine whether the broader market structure bill advances quickly or faces further delays.

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Bull Scenario: Clarity Sparks Confidence

If lawmakers strike a balanced compromise, possibly allowing limited yield under strict safeguards, it could be seen as a major step toward regulatory clarity. That clarity may attract institutional investors who have been waiting for defined rules before expanding exposure.

In this scenario, stablecoin issuers gain operational certainty, exchanges benefit from improved compliance pathways, and overall market sentiment turns constructive. Regulatory progress often reduces uncertainty premiums, potentially supporting crypto prices in the medium term.

Bear Scenario: Restrictions Slow Momentum

On the other hand, a hard ban on stablecoin rewards could dampen growth in decentralized finance and limit competitive innovation. If negotiations collapse or the bill faces renewed delays, uncertainty may persist. Prolonged regulatory gridlock could weigh on sentiment, particularly if investors fear tighter controls without corresponding clarity. In the short term, volatility is likely as markets react to headlines from Washington.

For now, traders remain on edge, aware that this meeting could shape the next phase of U.S. crypto regulation.

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